#VolkswagenUp!

The global auto industry is not a place in which small car production is as straightforward as it was a decade or two ago.

Brought closer to home, Americans are buying roughly 30-percent fewer subcompact cars now than they were just three years ago. With next to no fuel economy advantages; limited payment upside; and less refinement, power, and space, why would a car buyer choose a subcompact over a compact sibling? Most buyers don’t. In the United States, compact car sales are five times stronger than subcompact sales. August’s top three compacts (Civic, Corolla, Cruze) outsold their subcompact brethren (Fit, Yaris, Sonic) by more than seven-to-one.

Many automakers don’t even bother selling their smallest cars in North America. Mazda’s latest 2 never saw U.S. import. FCA has left the compact market, having long since left the subcompact sector to rivals. Subaru doesn’t dive below the Impreza platform. And Volkswagen stops at the Golf, leaving the subcompact Polo for more small-car-friendly countries.

But how keen on small cars are those other countries? In some instances, not keen enough. Volkswagen boss Herbert Diess tells Autocar, “Selling small cars is not easy.” And he’s clearly not just talking about F-150-loving America. “It’s a very European problem,” says Diess. As a result, the Volkswagen Up city car, a Lupo successor, may pull out of Europe in favor of emerging markets only.

As of late Brazil has been on a roll and a multitude of makers have set up or are in the process of setting up in our tropical paradise. Everybody from Jaguar to Hyundai (not to mention a motley crew of Chinese brands) are placing their bets, but they face an obstacle that nobody has really noticed: the existence of a number of foreign makes that locals consider, well, local. Among them, the most Brazilian of makes – Volkswagen. Currently trailing Fiat, and sometimes GM, VW nonetheless is as Brazilian as feijoada, and for the first time in decades, VW has deemed us worthy of getting a taste of the best they have to offer on their European menu, the whimsically named up!.

A low-cost Volkswagen, selling for between 5,000 and 10,000 euros, might be earmarked for China, and the range could include – brace yourselves – a station wagon!